Autosomal recessive hypotrichosis is a rare hereditary disorder characterized by sparse hair on scalp and rest of the body of affected subjects. Recently, three clinically similar autosomal recessive forms of hypotrichosis [localized autosomal recessive hypotrichosis (LAH)1], LAH2 and LAH3 have been mapped on chromosomes 18q12.1, 3q27.3, and 13q14.11-q21.32, respectively. For these three loci, two genes DSG4 for LAH1 and LIPH for LAH2 have been identified. To date, only five mutations in DSG4 and two in LIPH genes have been reported. In this study, we have ascertained two large unrelated consanguineous Pakistani families with autosomal recessive form of hypotrichosis. Affected individuals showed homozygosity to the microsatellite markers tightly linked to LIPH gene on chromosome 3q27. Sequence analysis of the gene in the affected subjects from both the families revealed a novel deletion mutation in exon 5 (c.659-660delTA) causing frameshift and downstream premature termination codon. All the three mutations identified in the LIPH gene, including the one in this study, are deletion mutations.